NEW YORK ( TheStreet ) -- Gold prices bounced Wednesday as the U.S. dollar tanked on news that 6 central banks, including the Federal Reserve, would lend more dollars at cheaper prices. Gold for February delivery added $31.40 to close at $1,750.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,754.70 and as low as $1,704.30 an ounce while the spot price was up $32, according to Kitco's gold index. Silver prices rose 85 cents to close at $32.80 an ounce while the U.S. dollar index was down 0.88% at $78.39.
The Federal Reserve, Bank of Japan, European Central Bank, Swiss National Bank, Bank of Canada and Bank of England have joined together to make more dollars available at cheaper prices in an effort to ease liquidity strains in financial markets.
China has been taking steps to tame inflation by raising interest rates, currently at 3.5%, and by raising the amount banks must hold in their coffers. Any signs to undo that as Europe heads towards a recession will be positive for gold. Hastings, however, points out that its local currency the yuan was actually rising against the dollar on the requirement cut which will serve to help China with inflation, "an irony missed in this morning excitement." China had already been doing its part to support gold prices. China's Minister of Industry and Information Technology has ordered local governments to crack down on small gold mines citing environmental worries. "This would make China even more dependent on gold imports to satisfy domestic demand, which is likely in the long run to be reflected in rising prices," wrote Commerzbank. China, including Hong Kong, consumed 607 tons of gold in 2010 with 260 tons of that being imports. "We think imports into China could be 400 tons this year," says Marcus Grubb, managing director at the World Gold Council, and now that number could be higher. It means China might be on track to consume more than 747 tons of gold in 2011. Gold is also finding support from a stronger equity market, which was soaring on the central bank news and as Automatic Data Processing said the private sector added 206,000 in November -- a positive indicator headed into Friday's jobs number. Although the ADP number can have a 15,000 jobs room for error, the 4 week moving average of those losing jobs are at a 33 week low. The more supported stocks are, the less need gold investors will have to sell positions. Gold trading around $1,750 could also trigger momentum buying as traders jump in not wanting to miss a big up move. Other gold mining stocks were soaring. Kinross Gold ( ABX) was rising almost 5.5% to $13.75 while Agnico-Eagle ( AEM) was adding 7% at $44.11. Other gold stocks, Eldorado Gold ( EGO) and Randgold Resources ( GOLD) were popping at $17.68 and $105.05, respectively. -- Written by Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel.